By Risha Gotlieb

Despite the proliferation of cellphones and personal digital assistants (PDAs), very few handheld devices are being used for Internet access and even fewer are conduits for mobile e-commerce.

Last year Canadians spent $21 billion on e-commerce transactions, of which a meager $4 million went through wireless devices, according to Joe Greene, vice-president of IDC Canada’s Internet research division.

IDC estimates about 860,000 Canadians accessed the Internet in 2000 through wireless devices, using cellphones, PDAs and BlackBerry pagers.

And Canada isn’t the only country where short-term prospects for mobile commerce, or m-commerce, look grim. In a recent worldwide survey of owners of Web-enabled phones, A.T. Kearney, a Plano, Tex.-based e-business consulting firm, found that only 12 per cent of respondents intended to engage in mobile commerce, down sharply from 32 per cent a year ago. It further noted that while Japan has the largest mobile Internet system in the world, the bulk of usage is still voice-centered.

"The industry as a whole must act quickly to reverse the alarming decline in Web purchasing intentions and accelerate the evolution of the phone into a multi-purpose personal tool," stated the A.T. Kearney report, entitled A Rude Awakening for WAP Dreamers.

Fragmented prospects

Does this mean there’s no future for m-commerce? Not at all, considering that the number of mobile phone subscribers in Canada is projected to grow from 9 million to 16.6 million by 2003, according to the Canadian Wireless Telecommunications Association. However, it will take some work on the part of various industry sectors to make the wireless Web and m-commerce more appealing.

This will not be an easy task. Today’s wireless world is still nascent—standards are far from complete and multiple competing standards are emerging. The different market leaders, whether carriers or hardware manufacturers, all want to dictate the standards that will enable high-speed ’net connections.

In fact, three different market sectors will have to come together in order to create the next generation of global communications. First, handheld manufacturers have to develop hardware that’s efficient in the delivery of m-commerce content. Second, carriers need to upgrade networks to facilitate the movement of large packets of data, which may involve deploying next-generation 3G wireless networks. Then, interoperability among the network providers, which use different technologies to move data, has to be improved. Third, content providers have to come up with content that end users want or need, while keeping in mind the inherent limitations of the mobile platform.

What’s more, the fledgling mobile industry finds itself in a classic catch-22 situation—no one wants to take the initial risk.

Although the carriers may roll out a next-generation network, how can they be sure there will be complementary handhelds to make use of it? Meanwhile, the handheld manufacturers still aren’t sure which network specifications or protocol they should target. And specialized wireless Web content providers are virtually non-existent in North America.

Enticing the masses

But everyone seems to agree on one bedrock issue: without end users, what’s the use of building any of the components at all? Or, as the A.T. Kearney report pointed out, building the infrastructure doesn’t guarantee the customer will come.

David Tait, a Toronto-based A.T. Kearney vice-president, thinks m-commerce won’t take off until the major players come up with "really compelling" applications that go beyond weather forecasts and stock updates.

The huge success of the DoCoMo I-mode mobile Internet service in Japan is due to the more than 10,000 content providers that serve the system, and Tait said Canadian wireless carriers need to follow a similar path by forming alliances with existing media companies and creative start-ups.

Some companies are starting to take the initiative. Microcell Telecommunications, the company behind Fido, is rolling out a 2.5G network that will enable always-on connections to the Internet at speeds of 115Kbps, said Alain Rheaume, president and CEO of Microcell PCS in Montreal. (While the 2.5G network is a major step, it falls short of the much-anticipated 3G service, which would support streaming video.)

Microcell also spearheaded "Project Rainbow," an initiative that brought together 80 companies from around the world to develop and market commercial mobile data services.

Bell Mobility is also rolling out advancements to its network. They’ve just introduced a "smartphone" that combines a wireless phone with the Palm OS. Kelly Dixon, general manager of Bell Mobility’s wireless data development in Toronto, thinks the deployment of such devices will be a major boost for m-commerce.

Also, most analysts believe the vast majority of mobile Internet transactions are likely to remain information-based for the next couple of years. This will include everything from getting location-based advertising and coupons from stores in a mall, to scanning movie listings and booking airline and car rental reservations. Thrifty Car Rental has already started offering bookings on some portable devices.

"Faster speeds and more sophisticated handsets are necessary to help build a mass-consumer market for wireless data services and mobile commerce," said Kevin Rea, product manager for mobile e-commerce products at Ericsson Canada in Mississauga, Ont. Without these, he said, there’s no need to develop extravagant applications.

New hardware that will facilitate m-commerce is now in the development stage, added Rea. These devices will not only ride the wireless Web but will also communicate with each other. In fact, we may soon be able to use cellphones to pay for small transactions, like buying a drink from a vending machine. In some parts of the world, this is already possible.

However, m-commerce still faces other obstacles, not the least of which are security concerns that already plague the Web and which are exacerbated when information roams freely through the air. In addition, the locator technology associated with wireless, which enables vendors to know where users are, raises strong concerns about privacy. Just imagine the implications of someone knowing what time you left the office or whom you’re visiting.

Others believe that the initial breeding ground for the wireless Web and m-commerce will take place in vehicles, not on handhelds. "The automobile will serve as the proving ground for wireless technology and applications," states a PricewaterhouseCoopers global study on mobile Internet, "because it avoids many issues associated with handheld devices, such as size, weight and battery life."

The business world

Lenard Boggio, who heads information and communications initiatives for PricewaterhouseCoopers in Vancouver, maintains that wireless will take hold in the corporate world before it becomes reasonably priced for a mass consumer market.

"The ability of businesses to maintain contact, to send instructions, to receive orders, to assist their employees in some way while they’re out in the field—that’s where we’re going to see tremendous inroads in the near future."

Val Rahmani, general manager of IBM’s Global Wireless Solutions, concurs. "If we want m-commerce to take off, we must give consumers something that is of value. Applications must be developed specifically to work within the limitations of the devices people are using, as well as the networks. For the foreseeable future we will have constraints, and we must work with those, not ignore them."

But she also envisions that m-life will one day prevail, and that mobile phones will become our all-in-one virtual credit cards, portable teller machines and Star Trek-type communicators. We’ll be able to access the ’net instantly in public places like airports and coffee shops.

Indeed, wireless gurus predict that portable devices will become our personal hubs, transmitting every form of communication from business-critical data to personalized pay-per-view video and music. But before the wireless Web and m-commerce can leap to such heights, it may first have to learn to crawl.